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The Canadian dollar strengthened to a near three-month high against its U.S. counterpart on Tuesday as investors bet on global economic recovery and ahead of an interest rate decision by the Bank of Canada on Wednesday.

The loonie was trading 0.4 per cent higher at 1.3517 to the greenback, or 73.98 U.S. cents. The currency touched its strongest intraday level since March 9 at 1.3483.

Gains for the loonie show that “markets are looking toward a brighter future,” said Michael Goshko, corporate risk manager at Western Union Business Solutions.

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Canada runs a current account deficit and is a major producer of commodities, including oil, so its economy could particularly benefit from a pickup in the global flow of trade and capital.

U.S. crude oil futures settled 3.9 per cent higher at $36.81 a barrel on hopes that major crude producers will agree to extend output cuts and as countries and U.S. states begin to reopen after coronavirus lockdowns.

The recovery effort bolstered world stocks , winning out over U.S.-China tensions and the worst civil unrest in the United States in decades.

“As equities continue to surge higher, the U.S. dollar continues to decline against most currencies, unwinding the safe haven trade,” Goshko said.

The U.S. dollar extended its decline since March against a basket of major currencies , while Canada’s 10-year was up nearly 1 basis point at 0.542 per cent.

Economists say that Canada’s economy likely bottomed out in April when non-essential businesses across the country were closed to help contain the coronavirus pandemic. Attention has been turning to how fast the economy can recover and the potential level of fiscal and monetary policy support.

The Bank of Canada is expected to hold interest rates at a record low of 0.25 per cent on Wednesday, when Tiff Macklem will begin his seven-year term as governor of the central bank.

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